China, We Have a Problem: A Mostly True Story.

A team of China lawyers at my law firm recently wrapped up a fascinating matter. Side Note: It is nearly always bad news when your lawyer describes your matter as “fascinating”.

Even though the matter is nearly over, I am going to gloss over certain facts and make up other ones so as not to leave any possible identifiers. The thrust is entirely true and the result is as well, and my reason for writing it also remains intact.

Here goes.

Young Chinese Child falls from a window in a room in which an American employee of our European client is one of the few adults. Child is badly hurt. It now appears his injuries will probably not be permanent, but he also may be in recovery for a year. His medical expenses by US standards were fairly low, but they are astronomical by Chinese standards, particularly for this less than large city. A day later, the parents of the child come with a local Chinese lawyer to tell the American employee they want USD$250,000 from him and his employer for the injuries to their child. They also go to the police with this same request.

The parents make clear to the employee that many in the town are behind them and that things will get much worse if payment is not received. The employer calls us and we immediately spring into action. We determine that the police do not seem to be buying into the parents’ story of guilt and they have not told this employee or any other employee of our client that they must remain in town or in China as either witnesses or suspects. We learn that our client is not terribly happy with its joint venture partner in this town and that it has no problem with taking its employees out of there right away and sending them back to their home countries to sit this whole thing out. Though they feel terrible about the injured kid, they do not consider themselves responsible and yet, they nonetheless offered the kid’s family a large amount by China standards.

Our research of the facts and the law all indicate our client is not liable. However, as everyone who has ever been involved in litigation anywhere in the world knows, not being liable and not being subject to expensive and time consuming litigation are two different things.
We determined the best course of action would be to get the employees out of this town as quickly as possible and on their way back to their home countries in North America and Europe. We figured that getting them out would change the leverage game entirely, and it does.

The employees leave and the settlement claim by the parents immediately plunges. Now we can talk with all parties (the child, the joint venture partner who actually owns and maintains the building from which the child fell) from afar, pretty much stripped of any imminent threats. Our client agrees to pay the parents a rough equivalent of their kid’s medical bills and we (fairly publicly) ask that instead of the Chinese joint venture partner paying our client what it owes it, that it instead pay all of that to the family of the injured child in addition to the medical payments. Agreements are signed on all of this and everyone moves on.

And yes, before anyone accuses me of this, I will come right out and admit it. The point of this article is that it pays to bring your China lawyers in early on a problem, rather than late. Early is better for your attorneys too, but only because many times when it is too late there is nothing the attorney can do beyond saying, “sorry.” See China Business: We Never Said it Would be Easy.